Now that we have entered the digital age, staying competitive and relevant in your chosen industry can be a challenging feat for both big and small businesses alike. Among the complexities, smaller companies face include the advent of new business models, consumerization of the workplace and the explosion of available data.
As businesses strive to stay ahead of the competition, they have adopted ERP to improve the day-to-day interactions between business functions, to help in automating back-office tasks and to streamline workflows among different departments.
With maximized use, ERP can reduce costs, boost efficiency and increase profitability.
So what is ERP?
ERP stands for Enterprise Resource Planning, and it is primarily a type of software used by various enterprises for managing functions such as accounting, billing, customer relationship management (CRM), inventory management, sales, and many others.
What is excellent about ERP is that it integrates corporate data into a centralized database and operates in real-time. Most companies use some form of ERP to integrate business information from their financial, customer and HR departments. ERP makes it possible for everyone working at the business to know whenever a modification on certain information is made within the system.
Each feature of an ERP is part of a universal goal to sync and improve different types of tasks in your business. To picture it clearly, imagine keying in an order for a particular product, the ERP will then be automatically triggered to produce a parts list, take those parts from the inventory, inform the production team, produce a task list, track the progress of the order and then send out an invoice. Indeed, ERP has found a way to make business processes quicker and more efficient.
ERP software systems feature modular functions. This means that you can enable certain functions you need whenever you need them, thereby also spreading the costs of the service across months or years. The features include CRM (Customer Relationship Management), Business Intelligence, Financial Management, HCM (Human Capital Management), Operations, and SCM (Supply Chain Management).
ERP is classified into different modules that support back-office functions. These include:
1. Financial Management
- This module is for managing accounts payable and receivable, balance sheet, bank reconciliation, fixed asset management, general ledger, and tax management. Additionally, it provides financial reports for different departments.
2. Customer Relationship Management (CRM)
- This module provides support to customer service by handling leads, customer concerns, problem tickets and integrating past interactions with CSR staff, purchase history and social media activities.
3. Sales and Marketing
- The most common function of this module is managing sales orders, sales inquiries, sales invoices, and quotations. This module is closely tied in with the CRM module to fast-track the sales process and boost profits for the company.
4. Human Resource Management
- The human resource management module helps the HRM staff in tasks including timesheet or attendance tracking, employee records filing, management of benefits, payroll, performance reviews, and job profiles.
- The manufacturing module is created for tasks like capacity management, engineering, and quality management. It is useful for a bill of material, distribution planning, production scheduling, and shop floor control. This module is tied up with the SCM module.
6. Supply Chain Management (SCM)
- SCM provides help for claims, goods inspection, inventory control, order entry, purchasing, procurement, and returns. It handles product processing starting from the production until it reaches the consumer and handles returns. A primary function of the SCM tool is the automation of process which enables the supply chain to adapt to any changes in the market.
- This module oversees the processes for materials procurement. Closely working with the SCM module, it works on purchase orders, supplier listings, stock updates, and quotation requests.
- The inventory module assists in measuring stock targets and standardizing replenishments; This module tracks products by using serial numbers.
9. Project Management
- This module has functions such as activity monitoring, billing, costing, and time and expense management.
10. Business Intelligence and Reporting
- The Business Intelligence module is used for analytics, forecasting, and KPI (key performance indicators).
11. Mobility and Remote Processing
- This module is used for reporting data through the use of smartphones, tablets, and laptops.
12. Warehouse Management and Data Collection
- The warehouse management module is used to operate barcode and data collection, shipping and receiving materials, labor tracking and warehouse management.
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ERP has been established more than 40 years ago when it was introduced to improve inventory control and management at manufacturing companies. As the number of firms adopting the ERP system increased in the 1970s to 1980s, it also expanded its scope beyond the manufacturing of plants to the production of other materials. Finally, in the 1990s, industry experts recognized the role ERP could play in different types of businesses and how it can organize all its business processes into one integrated form. This resulted in the transformation of ERP to a small business software solution that can integrate business activities.
Beyond knowing the ERP meaning, definition, functions and history, it is essential why your enterprise may need it. Even though all types of companies can always benefit from the adoption of a sound ERP system, the best way to know if your business needs an ERP is if your business procedures are not integrated with one another and they don’t bring your business growth or profitability anymore. ERP can help by enabling these companies to define what their best practices are, helping them reinforce activities and streamlining cross-departmental functions.
ERP is best suited for enterprises that have trouble distinguishing their actual revenue data because the data maintained by the finance department do not match those produced by the sales department. Having inconsistencies can cause problems in the evaluation of financial status, forecasting of the cash-flow and cause issues in the business’ profitability. ERP solves this dilemma by integrating all back-office information into one system for a smoother reporting of data.
So what’s so unique about ERP? Below is a list of advantages of getting the ERP software and why is it important to have for small businesses:
1. Improved data security
- ERP software is armed with firewalls that can protect you from a data breach. Additionally, the system has features that can allow the admin to guard sensitive data while still enabling users to access other information.
2. Boosted efficiency
- Different types of business functions like accounting, inventory, marketing, and sales are integrated into one system which means that the collection and access to data are easier which makes work easier for each department and allows them to focus their energies on what they do best rather than ask data from other departments.
3. Reduced costs
- With a streamlined process and well-monitored data, business departments can improve their workflow and suffer fewer interruptions leading to lower operational costs.
4. Improved cooperation
ERP integrates data and processes which in turn enhances cooperation among disparate teams by making use of cloud computing and other Web-based technologies.
5. Easy compliance with industry regulations
- To make it easier to conform to regulations and industry standards, ERP software systems have integrated, built-in standards that cater to data security, financial accounting, and product regulation protocols.
6. Enables accurate forecasts
- With the use of only one centralized database, ERP enables accurate forecasts and generation of accurate reports by ensuring that there are no disparities. Among the tools, ERP uses include filters and analytics that guard against duplication and ensures that the data is updated. Other ERP tools include machine learning and predictive algorithms for better insights and comprehension of data.
7. Improved flexibility features
- ERP improves your business’ operations with its flexible features. It enables you to add more modules with corresponding functions as your business grows to remove the hassle of having to buy new software that will replace the one already in place.
8. Features troubleshooting and maintenance.
- You don’t have to worry about technical problems with an ERP system in place as most ERP vendors provide troubleshooting as well as regular updates for your business.
The ability to change can make the difference to the future success of a business. Indeed, a good ERP system is relevant for your small business in 2019 because intelligent ERP systems enable enterprises to ingest more information in real time which results in the making of more informed and better decisions for your company. With an intelligent ERP system in place, all you need is a web browser to access the software anytime and anywhere. Processes become automated, and this paves the way for employees to spend more time solving problems instead of conducting transactions, extracting data, and looking for insights.
Kudos to our Customer Success Manager, Matthew! Always friendly, and always responsive when we have an issue. Thank you!
VP of Marketing, Credit Union of Ohio
Intellitek Systems helped us consolidate almost a dozen software systems into a single platform. Our users are much more efficient with a "single version of the truth" in our business!
Inrad has improved DSO from 49 days to 33 days since implementing OASIS ERP. The software is user-friendly and we were up and running within less than 90 days. Compared to more than six months for Netsuite, that's a small miracle in my book!
President & CEO, Inrad Optics
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